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The S&P/JPX Carbon Efficient Index incorporates a mechanism to adjust constituents' weights by their respective environmental data. Its objective is to motivate companies to improve their environmental disclosure.

Several financial instruments and mechanisms are available for public and private entities in ASEAN that look to fund green assets through equity, debt and partnerships. This step-by-step guide gives an overview of the financing process and its implementation.

This report examines the progress that has been made and the opportunities lying ahead for green bonds in ASEAN countries. It looks at regional themes in green bond markets and issuance from companies that operate in climate-aligned sectors.

We highlight five of the most pressing challenges and opportunities ESG institutional investors face in 2019: plastic waste, regulations, the effects of climate change, the big signal revolution and the role of corporate leadership.

In ESG terms, intentionality aims to evaluate whether a given fund or strategy has policies and procedures in place that demonstrate that the investment management process makes a concerted effort to address environmental, social, and governance issues.

In Korea, Commercial Act allows companies to issue preferred stocks that do not provide any voting rights. ESG investing could contribute to both discovering the fair value of DCS and alleviating asymmetric information around DCS.

A presentation at the 3rd ESG Symposium by CFA Korea Society on January 23.

Pengyuan International, a Hong Kong-based credit agency, publishes a draft of its evaluation criteria for green bonds, for public consultation. The framework aims to evaluate the potential contribution of debt instruments to low-carbon and climate-resilient society.

A study of companies in Asia Pacific emerging markets shows that firms engaging in all CSR dimensions including environmental, social, and governance practices can significantly add to the value of the firm.

Plastic pollution, particularly in oceans, is a growing environmental concern. The report takes a deep dive into the economy of plastics in search of companies well-positioned to mitigate the risks of plastic pollution and to deliver sustainable solutions.

How is GPIF achieving its green objectives through indices? S&P DJI’s Sunjiv Mainie, Kana Kawasaki, and Ryan Christianson discuss how they partnered with GPIF on the new S&P Carbon Efficient Indices to power their commitment to ESG. (Video: 6 min.)

India's status as the world’s fastest-growing major economy and its fast-growing population raise significant problems for the natural environment on which the country's people and economy depend. These problems could have significant financial consequences.

As Australia grapples with weaknesses in corporate governance in the financial industry revealed by the Productivity Commission and the Banking Royal Commission, more corporate governance challenges can be expected with pressures coming from regulators and investors. How do investors, particularly large institutional investors, welcome this rise of stakeholder capitalism?

Institutional investors, including Japan’s GPIF, are increasingly integrating ESG into their strategies. S&P DJI's Hannah Skeates and Andrew Innes are joined by Trucost’s Neil McIndoe to talk about how the innovative S&P Carbon Efficient Indices are being used as institutional portfolio building blocks. (Video: 8 min)

This article qualifies for 1 CE under the guidelines of the CFA Institute Continuing Education Program. We encourage CFA Institute members tologinto the CE tracking tool to self-document these credits.

Growing adoption of ESG investing after 2003 generates a new "friction" that affects the efficiency of stock markets. Socially responsible institutional investors tend to under-react to mispricing signals when they contradict the investors' preference for ESG performance. This leads to predictability of returns.

Businesses that successfully decarbonize their operations in line with global energy transition commitments may be more likely to protect their license to grow and avoid increased costs from carbon pricing.

Climate science finds that the trend towards higher global temperatures exacerbates the risks of droughts. We investigate whether the prices of food stocks efficiently discount these risks. Using data from thirty-one countries with publicly-traded food companies, we rank these countries each year based on their long-term trends toward droughts using the Palmer Drought Severity Index. A poor trend ranking for a country forecasts relatively poor profit growth for food companies in that country. It also forecasts relatively poor food stock returns in that country. This return predictability is consistent with food stock prices underreacting to climate change risks.

SPOTT assesses 50 timber and pulp producers on the public disclosure of their policies, operations and commitments to environmental, social and governance (ESG) best practice. Results show that the tropical forestry sector has much more to do to improve the public disclosure of its policies, operations and commitments, with an average score of just 31%. Only five of the 50 companies assessed demonstrated higher levels of transparency (scoring more than 66%).

Investors may not have sufficient access to publicly available information to assess land based risks such as deforestation and land-conflicts, as only eight companies were found to publish clear and comprehensive maps of their forestry operations, while 27 companies disclosed incomplete information. A further 15 companies do not provide any suitable maps of their operations, meaning the location of over 45,000 square kilometres – or over six million football pitches – of forestry operations remains unclear.

​To see the scorecard and individual company assessments: https://www.spott.org/timber-pulp/

To see the interactive summary of findings:
https://www.spott.org/timber-pulp-summary/

The European Commission(EC) published consultation ”Fitness Check” asking people with comprehensive view for the fitness of the EU reporting framework for public company to EU strategy of enhancing environmental investment. Recently EU issued a report which discusses sustainable finance by "High-level experts group(HLEG)" and announced its’ action plan.
This consultation is one of them. It asks people to possibility to amend IFRS 9 FV measurement for long-term investment. This is not issue only for EU. We discussed this consultation and summarize what we learned.

This study investigates causal interrelations among the four pillars of corporate sustainability including environmental, social, governance and economic performance. Besides, this study identifies the critical pillars deserving of highest reform priorities for sustainable development.

S&P Dow Jones Indices is committed to providing index solutions that provide choices and reflect low-carbon options. When we compare almost all the indices with their carbon-focused counterparts, the low-carbon versions actually outperformed the benchmark over a five-year period.

In 2017, CFA Institute and the PRI agreed to undertake an ESG investing study that entails a survey, a series of workshops and the release of four reports: one case study report and three regional reports. The aim of the study is:

to understand the current state of ESG investing in listed equity and fixed income across the AMER, EMEA and APAC regions;

The results of the study and the feedback from the workshops will be published in the regional reports. There will also be regional and country guidance and case studies on how investors are integrating ESG issues into their investment analysis and decisions. These reports will be readily available for all CFA members and PRI signatories.

The survey contains two sets of questions that should take roughly 8 – 10 minutes to complete. It covers the impact of ESG investing at the financial market level and firm level. It is being completed by participants across seventeen countries.

If you like to fill out the survey, please do so by 15 June. We appreciate your response.

The term “ESG integration” is often used when talking about ESG investing. Practitioners new to ESG investing are sometimes uncertain what ESG integration is and how it is performed—so much so that they may not realize they are already performing integration techniques informally.

One definition of ESG integration is “the explicit and systematic inclusion of ESG issues in investment analysis and investment decisions.” Put another way, ESG integration is the analysis of all material factors in investment analysis and investment decisions, including environmental, social, and governance (ESG) factors.

What does that mean? It means that leading practitioners are:

analyzing financial information and ESG information;

identifying material financial factors and ESG factors;

assessing the potential impact of material financial factors and ESG factors on economic, country, sector, and company performance; and

making investment decisions that include considerations of all material factors, including ESG factors.

What does that not mean? It does not mean that

certain sectors, countries, and companies are prohibited from investing;

traditional financial factors are ignored (e.g., interest risk is still a significant part of credit analysis);

every ESG issue for every company/issuer must be assessed and valued;

every investment decision is affected by ESG issues;

major changes to your investment process are necessary; and, finally and most importantly,

ESG-integration provides downside protection. Since it is a desirable trait, rational investors are willing to accept a higher price for ESG-investment products than comparable conventional-investment products. ESG-investing is likely to under-perform their counterparts in terms of ex-ante rate of return, and outperform their counterparts when ESG-events trigger financial losses. If ESG-investing is expected to provide the same return as conventional investing, the value of downside protection of ESG-investing is likely to be mispriced.

As revealed in a survey conducted in Asia Pacific by CFA Institute in March, a majority (60%) of the 450-plus respondents have not had any experience investing in firms with a DCS structure, which signalled the urgency for and need to educate investors and the general public on the implications of DCS structures.

The survey, “Dual-Class Shares and the Demand for Safeguards,” revealed that respondents in the region were divided when asked whether DCS structures should be introduced to the market, with 53% opposing the introduction and 47% in favour. Regardless of their position on DCS, almost all (97%) respondents considered it necessary to enact additional safeguards if DCS structures are permitted.

Among different possible safeguards, more than 90% of respondents considered it appropriate to implement enhanced mandatory corporate governance measures as well as time- and event-based sunset provisions, such as automatic conversion of shares with super voting rights to ordinary voting rights. Specifically, 94% of respondents considered it appropriate to introduce a time-based sunset provision; among which, 91% of such respondents considered it appropriate to convert shares with super voting rights to ordinary shares within 10 years. Separately, 93% of respondents considered introducing a maximum voting differential appropriate; 63% of these respondents found a 2:1 maximum voting differential optimal.

We argue that a pure, unconstrained, carbon-efficient portfolio outperformed a carbon-inefficient portfolio, as well as the underlying benchmark, on an absolute return basis, but underperformed on a risk-adjusted basis due to the portfolio having higher volatility.

On 5 April 2018, Asian Corporate Governance Association (ACGA) sent a letter to the Monetary Authority of Singapore in response to its "Consultation paper on Corporate Governance Councils recommendations".

On 23 March 2018, Asian Corporate Governance Association (ACGA) sent a letter to Hong Kong Exchanges and Clearing in response to its consultation paper: A Listing Regime for Companies from Emerging and Innovative Sectors".

On 9 March 2018, Asian Corporate Governance Association (ACGA) sent a letter to Bills Committee of the Hong Kong Legislative Council on Financial Reporting Council (Amendment Bill 2018) in response to its invitation to make a written submission.

The purpose of the Bill is to provide a statutory basis for, and funding allocation to, a fully independent Financial Reporting Council within the territory.

Are palm oil companies responding to increased scrutiny of their efforts to address the most pressing Environmental, Social and Governance (ESG) issues facing the industry? How many companies have adopted robust No Deforestation, No Peat, No Exploitation (NDPE) policies? How do they compare on human rights and labour issues? This briefing provides an overview of the results of transparency assessments of 50 of the main players in the palm oil industry (37 of which are publicly listed), carried out by ZSL and accessible on the open-access SPOTT.org platform.

Portfolio holdings disclosure has been a controversial issue for many years; SEC disclosure requirements in the US were relaxed from quarterly to semi-annual in 1985, then in 2004 returned to a quarterly mandate. Even today, some countries do not require holdings to be disclosed, and some are considering changing their laws to make it compulsory; New Zealand has made this change for KiwiSaver funds, and Australia is considering it. Further, in the US, there are current discussions about whether hedge funds should come under increased scrutiny, and be subject to more disclosure. In the last few years there have been several papers examining various aspects of the impact of disclosure – front-running, copycat trading, and reporting lag, in addition to the simple return performance differential. Most of these studies have either examined the before and after 2004 SEC rule change, or compare SEC disclosure vs. another disclosure mechanism. Our study examines the impact on fund return of disclosure in two ways. First, there are two markets where disclosure is not required but some funds choose to disclose – Australia and New Zealand. Second, in New Zealand in 2013 KiwiSaver funds became required to disclose top holding. The first affords us a natural experiment to compare funds that disclose with those that do not, and the second allows us to compare the same funds before and after the disclosure requirement. Based on some preliminary examinations and an earlier version of this paper, we expect to find, contrary to arguments against disclosure, that returns are not harmed by disclosure.

We find compelling evidence that integrating ESG (Environment, Social and Governance) into ongoing investment practices in Australia does not harm returns, limit diversification nor adds additional risk to portfolios and investments formed from high ESG rated firms. Portfolios formed from high-rated ESG firms can provide significant outperformance, superior diversification and lower overall portfolio risk when compared to portfolios comprised of low ESG rated firms. The inclusion of ESG into investment strategies in Australia is consistent with maximising shareholder value, minimising risk and is consistent with the fiduciary responsibilities required of professional asset managers and owners.

In this inaugural survey, RS Group sets out to understand the current state of play of sustainable finance in Hong Kong as viewed by six stakeholder groups. By identifying the key drivers, challenges and sentiment towards sustainable finance, the survey aims to spark conversations, motivate action, and ultimately inform and inspire readers to adopt sustainable finance. RS Group surveyed near 240 individuals representing asset owners, asset managers, financial institutions, corporates, thought leaders, government, and regulators, and among many findings note 90% of respondents believe Hong Kong is “behind” or “reactive” in terms of sustainable finance compared with other global jurisdiction. While 75% believe sustainable finance is critical in order to maintain the city’s primacy as a leading international financial centre.

RS Group is a Hong Kong-based family office whose mission is to advance a paradigm shift in people’s values and priorities, so that economic growth will not jeopardise human development and environmental sustainability. Recognising the severity and urgency of global issues faced today, RS Group have chosen to apply its entire capital portfolio towards advancing its mission. To further support sustainable finance in Hong Kong, RS Group began developing the "Sustainable Finance Initiative" (SFI) in 2017. SFI’s mission is to mobilise private capital for positive impact, and accelerate Hong Kong's transition towards a sustainable financial centre.

New research published by Moxie Future shows that women are leading the way when it comes to investing responsibly with almost two thirds of those surveyed expressing an interest in pursuing investments that have a beneficial impact on society.
The report entitled, “Understanding Female Investors: Women Using Capital to Change the World”(#UFI18) was commissioned by Moxie Future to better understand the investment preferences, habits and motivations of women and their interest in responsible investing, which entails channelling funds into companies and industries that are creating positive social and environmental change.
“Our survey shows that female investors want more than just good financial returns,” says Moxie Future’s Founder Ms. Jessica Robinson. “In addition, increasing numbers of professional women want to make investment decisions that positively influence the world and are aligned with their values.”
In total, 2,536 women aged 18 to 65 were surveyed across the five major markets of Australia, China, Germany, United Kingdom and the United States through online interviews conducted between March and April 2017.
Findings from the research highlight how female investors in China show the greatest interest and concern when it comes to responsible investment. In total, 84% of women surveyed in China expressed that they are motivated to be a responsible investor.
Among those surveyed, globally 69% of women indicated that they would be interested in investing responsibly if suitable products were available. Interest in responsible investment products is notably highest among women in China (91%) and the United States (74%).
Across all markets poverty, income equality, healthcare and climate change are causes that matter the most to women when it comes to investing their wealth.
In addition, while the research found that women are motivated, there are a number of barriers to be addressed. Many women view their lack of time, knowledge, understanding and distrust of information regarding investment products as the key obstacles in the responsible investment process. Within China however, the leading concern is lack of tested products in the market.
“The research shines a light on the mindset of today’s female investors from their priorities when making investment decisions to the concerns that may be deterring them from investing responsibly,” says Ms. Robinson.
“While our study has found that women are generally positive about responsible investing, it has uncovered the practical difficulties that they face when committing their money, not least a perception among women that the financial services industry is failing to offer advice that aligns with their goals and interests.
“What this tells us is, not only is there a disconnect between women and the financial services sector, but there are untapped opportunities for the industry to work more closely with female investors to deliver products and services specifically designed around them. This includes catering to the investment preferences of women and addressing their needs in a more meaningful way.”
With regards to China, Ms. Robinson attributes the higher levels of interest in responsible investing to the fact that Chinese women are facing more visible challenges, particularly environmental threats which may explain why they are more motivated.
“This is not forgetting that in terms of financial confidence, our research has uncovered that Chinese women tend to be the most bullish in their own investment abilities,” she continues.
Results from the research also point to how of the five markets surveyed, women in Germany appear to be the most lacking in confidence. Concludes Ms. Robinson, “When it comes to responsible investment opportunities, confidence matters because the higher the level, the more likely female investors are to be concerned and engaged.”
To view a full copy of the report, please see “Understanding Female Investors: Women Using Capital to Change the World.”HONG KONG, 30 January, 2018 – New research published today by Moxie Future shows that women are leading the way when it comes to investing responsibly with almost two thirds of those surveyed expressing an interest in pursuing investments that have a beneficial impact on society.

We study if positional embeddedness, specifically local degree and eigenvector centrality for CEOs, has an impact on the likelihood of the firm experiencing financial distress. Examining the impact three, two and one year prior to the event we conclude that an increase in CEO degree and eigenvector centrality ranking increases the likelihood of financial distress. Additionally, we find that this effect could be mitigated for CEOs with a longer tenure in the firm prior to attaining the position of CEO. Using measures of attribute based centrality, we find that appointed CEOs with more within-group connections face lower likelihood of financial distress for firms with specialty knowledge. Finally, we find that less homophilous board members with respect to educational achievements increases the likelihood of financial distress.

Socially responsible investing in India is at a nascent stage, but it is evolving and is expected to gain momentum in coming years.

The Malaysian market is characterized by family conglomerates, state owned enterprises as well as strong governance regulations for companies operating in the banking sector. The MSCI Malaysia Index constituents underperform on corporate governance relative to both the MSCI Emerging Markets and MSCI ACWI Indexes as a whole.

Financial institutions are voicing their support and creating investment opportunities, companies are identifying business value and reporting their contributions, and a multitude of frameworks are emerging to fill the gap between ambition and attainment.

Whether we’re talking about instruments that are formally designated as "green bonds" or unlabeled climate-aligned issuances that still fall under the environmental, social, and governance (ESG) umbrella, the demand for such sustainability-tied debt is rising. The green market can no longer be dismissed as a feel-good fad propped up by regulatory agendas. Although just a tiny sliver (less than 1%) of the roughly US$100 trillion global bond market, sustainability bonds, which include labeled and unlabeled green bonds as well as social bonds, offer a viable way forward for a wide-reaching cadre of constituents (e.g., banks, investors, governments, and corporations) looking to fund environmentally favorable projects, and to do so at a profit.

The size of the market for global labeled green bond issuances increased to US$81.6 billion in 2016, nearly double the amount issued the year before. China led this increase, accounting for more than a quarter of the 2016 total. The primary market may not be a place to hunt for juicy spreads, but pricing signals in the burgeoning secondary market tell a different story, suggesting that alpha can be gleaned from all that green.

By Rich Blake. Rich, a CFA Institute contributor, is a veteran financial journalist who has written for numerous media outlets, including Reuters, ABC News, and Institutional Investor.

Recently, a major shift has been observed among asset owners who once took a “tokenistic” approach toward environmental, social and governance (ESG) and are now looking to integrate it into core investment strategies. The pensions industry considers ESG themes, including the transition to a green economy, as an integrated part of their investment philosophy and processes. Asset owners, including defined benefit schemes, are citing ESG risks as central to their fiduciary responsibility. FTSE Russell recently surveyed 200 asset owners globally and asked what their strongest motive was for incorporating ESG considerations into their investment decisions.

The world of index-based investing is in flux as ESG integration into passive is on course to become the norm for new mandates. In the last year there has been a quiet revolution taking place as asset owners have been moving to integrate ESG into index designs for new mandates on core passive portfolios.

On the outperformance of responsible investing (RI) which incorporates environmental, social, and governance (ESG) into investment decisions, the empirical evidence to date is inconsistent from the viewpoint of ex-post performance. This paper tries to explain the nature of return differential between RI and conventional investing within the well-known risk-return paradigm. From the viewpoint of ex-ante equity risk premium, the five factor model of Fama and French [2015. “A Five-factor Asset Pricing Model.” Journal of Financial Economics 116: 1–22] combined with a ESG-related factor applies to returns on 1,425 US open-end equity funds for the period from April 2009 to December 2016. Empirical findings include that US open-end equity funds tend to hedge the ESG-related systematic risk, and that the exposure to ESG-related systematic risk is significantly priced in the market. The result implies that RI provides the downside protection against ESG-related systematic risk which is not reduced even through extensive diversification.

This paper tackles the role inclusive businesses play in our economic growth. We shall also be tackling specific companies and their programs geared towards inclusive business and poverty alleviation. Lastly, we shall seek means on promoting this business model so that more would participate in this initiative.

In the first three quarters of 2017, green bond issuance reached USD 83 billion, nearing the issuance reported by the Climate Bond Initiative for full-year 2016 (see Exhibit 1). France accounted for 18% (USD 14.8 billion) of the issuance, driven primarily by the USD 7.6 billion sovereign bond issued by the country in January. Commercial banks issued 44% of the USD 12.4 billion of capital raised in China to fund green projects. U.S. municipals continue to account for about half of the U.S. issuance YTD, however asset-backed securities continue to increase market share. Fannie Mae, a newcomer in 2017, issued its fourth green ABS in August, bringing its YTD total to USD 1.8 billion of USD 11.4 billion issued in the U.S. market through the end of Q3 17 (see Exhibit 2).

Thai insiders can earn significant abnormal returns from trading shares of their firms. The effect is more pronounced when trades occurred prior to earnings announcement. The results provide reasoning for regulation that prohibits the insiders to trade prior to earnings announcement. Both family ownership and control structure affects the magnitude of market reaction. The findings support the entrenchment effect in family firms. The presence of specific categories of blockholder has monitoring effect while some types of blockholder seem to enhance insiders’ signal and strengthen the market reaction. Significant reduction in abnormal returns earned by insiders in the firm with voluntary blackout policy suggest that the policy effectively forbid the insiders to trade when they possess valuable information that is not available to the public.

To consider and discuss asset owner perspectives on the past, present and future of sustainable investment, FTSE Russell hosted an asset owner roundtable in London on 6 December 2016. This panel formed part of a high profile event to celebrate the 15th anniversary of the FTSE4Good Index Series and the launch of the ESG Ratings data model on FTSE Russell’s online client analytics platform (QSD).

This is an English translation of Speech made at CFA Japan Special Symposium: Fiduciary Duty Reform “Future of Finance” Initiative.
Provided by: Mr. Junichi Nakajima, Deputy Director General The Planning and Coordination Bureau Financial Services Agency (“FSA”).

Financial Services Agency (the FSA) in Japan is now making an all-out effort throughout our agency to achieve a stable environment for asset building by Japanese households. At the end of March of
2017, the FSA made public the principles concerning the Customer-Oriented Business Conduct
(fiduciary duty), together with measures for stable asset building. He Explains the specific measures taken by the FSA.

China has emerged as a global leader in green finance, especially green bonds, and from 2014 to 2016, it was the fastest-growing market in the region for sustainable investing. The total amount of green-labeled bond issuances amounted to USD 93.4 billion at the end of 2016 and reflected strong China-based issuances (40% of labeled green bond issuance in 2016 was from China) and momentum from the Paris Agreement.

The Zoological Society of London (ZSL) has published updated environmental, social and governance (ESG) assessments of 50 of the world’s largest palm oil producers and traders. Companies are scored against a framework of 125 indicators using publicly available corporate commitments and policies on ESG issues. This research is done to inform ESG integration and support investors’ engagement and decision-making processes. This blog outlines the main findings of the latest round of assessments, especially with reference to discrepancies between corporate commitments and evidence of implementation.

CFA Institute further extends ARX ESG Investing Series to Singapore to discuss motivations for ESG integration in the region.

Panelists from S&P Dow Jones Indices, City Developments Ltd., ADL Infra Capital Myanmar, and ESGuru spoke to a full house of CFA Institute members and local practitioners on developments in green finance.

Social and governance considerations still in their infancy in the region.

The question of alpha potential inconclusive.

Dr. Tony Tan, CFA, head, global society advocacy engagement at CFA Institute kicked off the May 11, 2017 lunch-time talk entitled ‘Is green finance a fad? Or does it possess alpha potential?’ The event, organized by CFA Institute and CFA Society Singapore follows the first of the ARX ESG Investing Series, hosted in Hong Kong. This series has been developed in response to demand for ESG-related research on research platform, Asia-Pacific Research Exchange (www.arx.cfa).

Published in May 2017, this research reveals most active managers fail most of the time, at least if we define failure as underperformance of an appropriate passive benchmark. Success, when it does occur, tends not to persist.

MSCI ESG Research products and services are provided by MSCI ESG Research LLC, and are designed to provide in-depth research, ratings and analysis of environmental, social and governance-related business practices to companies worldwide. ESG ratings, data and analysis from MSCI ESG Research LLC are also used in the construction of the MSCI ESG Indexes. MSCI ESG Research LLC is a Registered Investment Adviser under the Investment Advisers Act of 1940 and a subsidiary of MSCI Inc.

A new survey looks at how fossil fuel companies report on their stranded assets using integrated reporting (). Investors and regulators are becoming increasingly aware of the potential threat from ‘stranded assets’ to financial stability and to fossil fuel company market valuations. With this awareness comes the need for greater information to help investors and others understand these risks better and appreciate the extent to which companies are taking mitigation action. This new survey looks at how fossil fuel companies have been responding to this in their reporting.

The topics have been selected on the basis of ACCA’s sustainability research to date and although for these purposes have been separated out, we acknowledge that these topics are interrelated. As the scope of ACCA’s research broadens over time, it is expected that additional topics will be added to this list.

sustainability reporting

integrated reporting

assurance of non-financial reporting and disclosures

climate change

natural capital

green economy.

This paper serves as a reference for our key stakeholders, as well as a means of summarising the outcomes and conclusions of ACCA’s research activities.

State-owned enterprises (SOEs) have been criticized for poor governance and questionable efficiency. In a recent paper titled ‘Leviathan Inc. and Corporate Environmental Engagement,’ Dr. Pedro Matos from the Darden School of Business, University of Virginia, and his colleagues from the University of Hong Kong and Singapore Management University conducted an international study of the impact of state ownership on a firm’s engagement in environmental, social, and governance (ESG) issues.

There has been significant debate on the effects of ESG issues on shareholder value. In this paper, it was found that SOEs are, in fact, more engaged in environmental issues and, more importantly, this engagement does not come at the expense of shareholder value. Furthermore, SOEs are also more engaged in social issues, but they do not reveal better corporate governance performance.

This is a recording of the presentation hosted by CFA Institute, HKSFA, ACCA, FSDC, HKIRA, and HKU SPACE Executive Academy on June 6, 2017 at HKU SPACE Po Leung Kuk Stanley Ho Community College in Hong Kong.

Summary presentation at the Korea Institutional Investment Forum hosted by Asian Investor on 20th June 2017 under the title of "The Importance of Good Corporate Governance and How Investors Can Create Change"

A new CFA Institute study predicts large scale trends will have a significant impact on the investment industry. The landscape is expected to change dramatically and new skill sets will be necessary for investment professionals to be successful in this new environment. This is likely to produce fresh challenges for organisations providing education to the investment industry. They will need to adapt and construct educational services relevant for the industry of tomorrow. Some are evidently already moving towards a more engaged role.

The Investor Responsibility Research Center Institute (IRRCi) commissioned Sustainalytics to develop a report, How Investors Integrate ESG: A Typology of Approaches. The report examines how investors integrate ESG factors into their portfolios, finding that investors are leveraging a diverse set of integration strategies. Based on an analysis of the investment practices of 70 institutional investors with total assets under management of $19.9 trillion, the report presents the first-ever typology for classifying the approaches investors are taking to integrate ESG factors into their investment processes.

The report classifies ESG integration approaches along three dimensions: management (who is integrating ESG), research (what is being integrated), and application (how the integration is taking place). Each dimension includes key differentiators – for example the degree of centralization of ESG functions within an organization, or the degree to which macro-level sustainability trends (as opposed to individual company ESG factors) are integrated – as the basis for distinguishing between approaches. The report authors used the typology to identify six prevailing approaches of ESG integration in the market today: 1) The Believer, 2) The Cautionary, 3) The Statistician, 4) The Discretionary, 5) The Transition-Focused, and 6) The Fundamentalist.

The report also includes several high-level observations about the current landscape for ESG integration, including:

Despite the continued groundswell of investor interest in ESG, limitations defined in investment mandates may be constraining ESG integration.

A growing number of large investors are paying increased attention to companies’ sustainability impacts and how these impacts may generate systemic risks that can jeopardize economic value.

Access to ESG research and public commitments to consider ESG issues do not necessarily ensure that ESG information is integrated into investment decision-making.

Our research assesses 450 Japanese firms and finds significant differences in the corporate governance adaptability of Japanese industries and firms. Specifically, diversified financials stands out as the industry best prepared to adapt to Japan’s shifting corporate governance environment.

In Asia, the subject of ESG investing has been a very trendy topic. As we all know, for many years, many investors have tried to incorporate elements of values and social responsibility into their investment strategies. However, the return of these strategies has in the past left a lot to be desired. It is natural to wonder why a rational investor would be willing to compromise the chances of superior performance in return for moral gratification.

Well, past performance is not always a guide to future performance, and change is in the air. More and more investors and asset owners are now placing increasing focus on ESG. As an example, California State Teachers Retirement System, one of the largest asset owners in the world, has asked their fund managers to evaluate and assess 21 risk factors in each of their holdings, including, among others regulation, human rights, environmental and governance.

On April 27, 2017, CFA Institute hosted a Green Finance Forum in Hong Kong to explore this issue. Full report on that event is attached.

In a special report in 2010, The Economist called the resurgence of state-owned mega-enterprises, especially those in emerging economies, “Leviathan Inc.”, and warned about the dangers of the state capitalism model. Traditionally, state-owned firms have been criticized for poor governance and questionable efficiency. In fact, they may be better positioned to deal with market failures and externalities. Our findings based on publicly-listed firms in 45 countries suggest that government-controlled companies engage more in environmental issues, and this engagement does not come at a cost to shareholder value. The effect is more pronounced among firms in emerging market economies and in countries with higher energy risks. The effect is attributable to ownership stakes held directly by domestic governments, rather than to foreign state ownership or investment via sovereign wealth funds. Difference-in-differences estimates show that state-owned firms reacted more significantly to the 2009 Copenhagen Accord in improving their environmental performance. Interestingly, state-owned firms also engage more in social issues, but they do not reveal better corporate governance performance.

On 27 April, CFA Institute co-hosted a green finance forum with the Hong Kong Society of Financial Analysts and the Hong Kong Financial Services Development Council (FSDC), a high-level government advisory body that conducts policy research and industry surveys for the formulation of proposals to the Government and regulators. This is the second green finance forum organized by CFA Institute in Hong Kong, ARX’s second o2o event as well as ARX’s ESG Track maiden event. The forum attracted 140 attendees including CFA members, industry practitioners, think tanks, environmental and other NGOs.

The evening began with a keynote speech delivered by Martina Macpherson, S&P Dow Jones Indices Head of Sustainability Indices on an overview of green finance and ESG trends. Up next Mary Leung, Head of Standards and Advocacy for CFA Institute Asia Pacific led a panel discussion featuring Martina and ESG experts from PwC, HSBC and AXA Investment Managers focusing on the intrinsic value of ESG.

The PowerPoint Presentation of Martina's keynote speech can be downloaded in the attachment.

Overall the event was a great success with very positive feedbacks from both participants and panelists. The next stop for the CFA Institute Asia-Pacific Research Exchange ESG Series will take place in Singapore on the 11th May 2017.

This report examines the sustainability profiles of Morningstar’s suite of 46 equity market indexes, up from 35 indexes in the initial edition of this report in October 2016. The country indexes, which span developed and emerging markets and represent 97% of global market capitalization, vary significantly across environmental, social, and governance (ESG) criteria.

This article by Bloomberg Intelligence looks into the current state of ESG transparency in Asia. Bloomberg Intelligence is Bloomberg's research arm providing in-depth analysis and data sets on industries, companies and credit, government, economic and litigation factors that impact decision-making.

The article introduce Importance of Extended Auditor's report for corporate governance perspective. Target is general people, not accounting / audit professional. Currently the quality of financial statements becomes more important for communication between investors and companies. Following UK, EU is going to mandate it soon. Investors and companies in Japan or countries which hasn't discussed yet, might be good to see this idea once.

An increasing body of work has identified ‘corporate social responsibility’ (CSR) as an institution, and has suggested that its institutionalised form may be deployed to pursue traditional business imperatives and avoid burdensome legislation. This article will examine how responsible gambling is understood in Macao’s gambling industry and why firms in Macao’s gambling industry engage in responsible gambling (RG). This study is primarily based on an in-depth examination and analysis of Macao’s gambling industry with 49 semi-structured interviews. This study gives an account of the ‘responsible gambling’ practised in the gambling industry in Macao to show that gambling companies make use of the institutionalized (unstated) characteristics of CSR to leverage political and economic privileges. Responsible gambling is presented as the central component of CSR, articulated through varied stakeholders, while responsible gambling in practice focuses symbolically and solely on employee protection. The study shows that gambling companies derive substantial legitimacy benefits from the institution of CSR, thus positioned.

The Hong Kong Special Administrative Region of China (Hong Kong) has long been positioned not only as an international capital market but also as the global financial centre for China. To position themselves for overseas expansions, major enterprises in China are now listed with the Stock Exchange of Hong Kong and adopt internationally accepted corporate practices. In particular, there have been emphases by multinationals on Corporate Social Responsibility (CSR) practices for the potential benefits of enhanced business performance as demonstrated in prior studies. The aim of this paper is to explore the relationship between business performance and CSR practices among listed companies in Hong Kong. We have investigated and made comparisons between two groups of listed companies in Hong Kong -- those included in the Hang Seng Corporate Sustainability index and the other major ones in Hong Kong not included in the Index. It is found that there is a significant difference between the two groups in the sample. A direct association between adoption of CSR practice and sustainable business performance in financial aspects is observed over an extended period of time. However, we argue that there is not yet sufficient disclosure in relation to the quality of their overall CSR and sustainability performance.

In recent years, there has been increased consensus that corporate social responsibility (CSR) is significant for the sustainable development of companies and society as a whole. CSR is increasingly incorporated into mission statements and prioritised in strategic configurations of modern organisations (Mersereau and Mottis 2011; Bennett and James 1998). According to a 2009 survey conducted on Fortune 500 firms, CSR is becoming an increasingly prominent and accepted part of the corporate strategy agenda. However, there is very little understanding of how different control mechanisms are adopted to operationalise strategic agendas related to CSR. Against this backdrop, this research examines the way in which companies embed CSR in their MCS in an attempt to align the behaviour of organisational participants with strategic objectives concerning sustainability in China.

Operational and reputational risks are likely to arise from investments in commodity production especially where production activities may lead to deforestation or land conflicts. Palm oil companies are a case in point as oil palm plantations have driven deforestation in Indonesia and Malaysia and concession agreements are frequently challenged by affected communities. With changing consumer demands and the tightening of regulation in South East Asia, palm oil producers have come under enormous scrutiny which may affect investments in them.
We argue that the use of ESG analysis and company engagement can help mitigate these risks. The Zoological Society of London (ZSL) has developed the Sustainable Palm Oil Transparency Toolkit (SPOTT) to enhance the transparency of palm oil companies and support bottom-up ESG research. SPOTT assesses 50 prominent palm oil companies against 54 best practice indicators on a bi-annual basis.
In this blog post we present some notable developments from the latest round of assessments and demonstrate how SPOTT can help investors go beyond RSPO certification in their ESG research.

The primary motive of any firm has always been to generate profits and maximize value for its shareholders. However with global economic crisis unfolding one after the other since the start of the millennium there has been a shift in the focus of governments, regulators, investors and corporations to a more “socially responsible” behavior by firms in addition to profit maximization. This includes the importance given by firms to areas such as sustainability, environmental, social and governance (ESG) concerns and ethical considerations. This has generated lot of research interest in comparison of performance of firms that do show due consideration to these factors versus those that do not. In this study we highlight the gaps in the existing literature and follows econometric modelling to discuss following hypothesis:
Hypothesis 1: High Level of Corporate Sustainable Performance in terms of Environmental, Social and Governance will be associated with high financial performance
Hypothesis 2: Size of the firm will moderate the relationship between Corporate Sustainable Performance in terms of Environmental, Social and Governance and financial performance.
Hypothesis 3: Industry classification of the firm will moderate the relationship between Corporate Sustainable Performance in terms of Environmental, Social and Governance and financial performance.

The primary motive of any firm has always been to generate profits and maximize value for its shareholders. However with global economic crisis unfolding one after the other since the start of the millennium there has been a shift in the focus of governments, regulators, investors and corporations to a more “socially responsible” behavior by firms in addition to profit maximization. This includes the importance given by firms to areas such as sustainability, environmental, social and governance (ESG) concerns and ethical considerations. This has generated lot of research interest in comparison of performance of firms that do show due consideration to these factors versus those that do not. In this study we highlight the gaps in the existing literature and follows econometric modelling to discuss following hypothesis:
Hypothesis 1: High Level of Corporate Sustainable Performance in terms of Environmental, Social and Governance will be associated with high financial performance
Hypothesis 2: Size of the firm will moderate the relationship between Corporate Sustainable Performance in terms of Environmental, Social and Governance and financial performance.
Hypothesis 3: Industry classification of the firm will moderate the relationship between Corporate Sustainable Performance in terms of Environmental, Social and Governance and financial performance.

The investigative work of Professional Conduct has always been associated with words like secretive, mysterious, or private. That is only part of our story in Professional Conduct. Read on to find out more about our work in Professional Conduct and volunteering opportunities to help make a meaningful difference -- the CFA brand is important to protect, so is market integrity and ethical standards.

This report was produced in September 2014, in collaboration with the Asian Corporate Governance Association (ACGA), an independent, nonprofit organisation based in Hong Kong and working on behalf of all investors and other interested parties to improve corporate governance practices in Asia.

Asset Manager Code of Professional Conduct is currently available in 13 languages.
They are Arabic, Chinese, English, French, German, Indonesia, Italian, Japanese, Korean, Portuguese, Russian, Spanish and Thai.

This consultation paper forms part of ACCA’s investigation to examine whether existing governance and risk management frameworks are ‘fit for purpose’. It asks whether corporate governance in practice, is helping business to create value or whether something has gone wrong.
This paper argues that corporate governance is about creating value and that governance codes should be evaluated on how well they facilitate the creation of value. It sets out how a framework of ‘performing, informing and holding to account’ can work.

This paper presents the value of gender diversity in business. It aims to help CFOs, senior finance professionals and HR professionals working alongside finance teams, to understand the value of gender diversity and make the business case for diversity to their peers.

This report revisits the topic of short-termism—originally discussed in the 2006 report Breaking the Short-Term Cycle—but this time from a different perspective and with a very specific audience in mind: the corporate director—specifically, the “Visionary Director.” A Visionary Director is a director committed to working with management to make a company successful in the long-term, and who does not tolerate corner-cutting strategies to meet fleeting short-term expectations. This report identifies the issues, opportunities, and leading practices of Visionary Boards to combat short-termism and build long-term value for shareowners.

These are the individual reports for 28 different markets.
Reports concerning Asia-Pacific markets are extracted independently for convenience, while other reports can be found in the full PDF version below.

Section 1 of this report2 defines preemption. Section 2 draws a comparison between regulations in different jurisdictions in Asia (i.e., Hong Kong, Malaysia, Singapore, and Thailand) and the United Kingdom. Section 3 analyses Hong Kong placings data over four years (January 2009 – December 2012) and highlights the trend and implications of multiple and continuous private placements completed through general mandates in Hong Kong. Section 4 summarises the rights, roles, and responsibilities of various stakeholders—management; boards; controlling shareowners; and minority, or noncontrolling, shareowners—within organisations and the role of regulators in the corporate governance ecosystem. This final section also recommends policy changes to improve minority shareowner rights in any organisation.

In this summary of CFA Institute findings, we take a brief look at the history of proxy access, discuss the pertinent academic studies, examine the benefits and limits of cost–benefit analysis, analyze the use of proxy access in non-US jurisdictions, and draw some conclusions.

This CD&A template offers companies a guide to help ensure that the CD&A is a clear, concise, and understandable tool for communicating to investors the company’s approach to its executive compensation program. Essentially, it gives insight into the analytical underpinnings of the numbers reflected in the tabular and other disclosures that follow the CD&A.
Companies and compensation committees should view this CD&A template as a flexible template, particularly because the CD&A should be a properly customized story and should not devolve into “boilerplate” language. The goal is to use the template approach to include the basic elements of the compensation narrative in a manner that best tells a company’s compensation story. This template is designed as a best practice source for creating a CD&A that is a clear, concise, and legally compliant representation of a company's unique, and often complex, compensation scheme.

This guide is divided into three chapters.
Chapter 1 provides background information needed to understand ESG considerations in investing, Chapter 2 explains the application of different methods of considering ESG issues, and Chapter 3 explores salient issues in the debate on ESG considerations.

This report aims to encourage understanding of what corporate governance means for SMEs. It draws extensively on material presented and discussed during a seminar organized by the Economic and Social Research Council (ESRC) and held in ACCA’s London offices on 19 November 2014 and incorporates the views of the ACCA Global Forum for SMEs.

The Global Economic Conditions Survey (GECS) is one of the largest regular economic survey in the world in respect to respondents and the range of economic variables monitored. Its main indices are good predictors of such factors as GDP growth and daily trend deviations correlating with VIX (or ‘fear’ index), which measures expected stock price volatility. Fieldwork for the Q1 2015 GECS took place between 11 September and 22 September 2015, and attracted over 950 responses.

Report is a compilation of a series of roundtable discussions hosted by Grant Thorton and ACCA in seven nations globally into the impact on audit practices to rapid changes around the the world and the future impact on auditing.

The objectives of the study were to: (a) Examine corporate governance (CG)
requirements in terms of clarity and completeness of content, degree of
enforceability and prevalence; (b) Identify common/basic CG requirements and emerging trends; (c) Raise awareness of the similarities and differences in CG requirements across markets, geographic regions, economic zones and pillars/themes of CG; and (d) Inform other industry research.

This report explores the changing corporate sustainability reporting landscape, outlines its components, addresses current challenges and proposes development opportunities. It provides a considered overview of the trends, levers and drivers influencing the reporting landscape. It also proposes ideas to prompt discussion among professionals involved in reporting who seek standardisation, rationalisation and order.

This paper presents the results of a study that measures the costs associated with litigation for plaintiff and defendant companies for a sample of companies listed on the Australian Securities Exchange. The study uses event study methodology to examine the effects of litigation initiation announcements, settlement announcements and judgment announcements. The study also examines whether the impact of an announcement is related to the type of plaintiff (such as corporate plaintiff or a government plaintiff) and whether the impact differs according to the type of legal claim (such a breach of contract, a trade practices matter, an intellectual property infringement or securities fraud).

The increasing use of on-market buyback programs in Australia may not be fully explained by the typical motivations of information signaling and free cash flows offered by previous researchers. For some firms at least, management may believe the shares are overvalued. It is in this context that we examine whether managers of firms with high levels of executive stock options have an incentive to initiate buyback programs. It has been argued that managers may be motivated to undertake on-market buyback programs in order to neutralize the dilution of earnings per share caused by their stock options, rather than for signaling purposes. Our findings are consistent with this argument because we find that the higher the proportion of executive stock options outstanding the more likely it is for firms to undertake larger on-market buyback programs. Overall our results indicate that the existence of executive stock options influences managers' decision to implement on-market buyback programs but that it is not the only factor that managers take into consideration.

Do changes in the legal and regulatory environment of a country affect companies' financing/investment decisions? In this paper, we address this question by examining the market's reaction to announcements of share buybacks in Australia. Before 1989, Australian companies were prohibited from repurchasing their shares and, until 1995, they were heavily regulated with few companies repurchasing their shares. In December 1995, the regulations governing share buybacks were simplified making it considerably easier for companies to repurchase their shares. The changing Australian legal regulation of share repurchases provides a unique opportunity to test the effects of legal regulation on companies' financing/investment decisions. We find that, unlike in the United States, the market reacts most positively to on-market buybacks (equivalent to open-market repurchases), while the reaction to other types of share buybacks is positive but not statistically significant. We also find that the abnormal returns earned by resource sector companies announcing share buybacks are higher than the abnormal returns earned by share buybacks announced by companies in the industrial and financial services sectors. An examination of matched companies announcing share buybacks before and after the regulatory changes in December 1995 shows that the market attaches a substantially higher value to the removal of stringent regulations governing share buybacks. This evidence is consistent with the expectation that the stringent regulation of share buybacks during 1989-1995 made them less effective as a credible signaling mechanism.

Diffuse share ownership is not as pronounced in the U.S. as many would assume. This has led to a body of research examining large shareholders, or blockholders. Issues addressed include whether firms with a blockholder perform better or worse than widely-held firms; whether firms with a blockholder pay their executives differently to widely-held firms; and whether the presence of a blockholder increases or decreases the incidence takeovers. Another issue, which this paper explores, is what motivates block share ownership. Bebchuk (1999a, 1999b) develops a model which predicts that a firm is more likely to have a controlling blockholder if the anticipated private benefits of control at that firm are comparatively large. This paper examines the factors associated with ownership structure among publicly traded Australian firms. Our results indicate that private benefits of control are a significant factor in explaining the differences in ownership structure among Australian firms. As importantly, we also find that the relationship between the existence of a blockholder and private benefits of control is endogenous. That is, the presence of a controlling blockholder strongly influences the prevalence of these private benefits of control.

This is a working paper from my PhD thesis on "MONITORING BY FINANCIAL INSTITUTIONS AND IMPACT ON FIRM PERFORMANCE: EVIDENCE FROM INDIA". The paper empirical provides evidence of emergence of Institutional monitoring in India's corporate governance sphere dominated by foreign institutions (FIIs).

This research article intends to create awareness about DVRs/Dual class shares in India, to study the international as well as domestic experience and tries to examine the various factors that affect DVR share prices.
This is an Accepted Manuscript of an article published by Taylor & Francis in Macroeconomics and Finance in Emerging Market Economies on 01 March 2012, available online: http://www.tandfonline.com/doi/abs/10.1080/17520843.2011.643539

Real estate investment trusts can provide many benefits to investors; however, these benefits often are clouded by poor governance that can weaken unitholders’ rights. Regulators and industry participants in prospective and existing REIT markets must establish robust governance structures to minimize risk of expropriation by insiders and strengthen unitholders’ rights.

Recent international forums such as COP21 and the World Economic Forum have drawn increased attention to global economic risks arising from corporate environmental, social and governance (ESG) practices and performance. The global drive towards considering ESG factors as core components of business and investment strategies gains momentum year-on-year. Based on a presentation shared with CFA members in New Zealand and Melbourne, this FTSE Russell article explains the trends taking place in Australia and Asia Pacific…

RI Asia 2016 took place at the Tokyo Stock Exchange on the 23-24th February, and was attended by approximately 400 domestic and international participants. Whilst each participant may have a different take on the two days, I am delighted to share with you my own thoughts.

This research aims to ascertain if treasury shares are
adjusted by a particular type of split; rights issue. The
research uses screening samples with size of 37 Japanese
companies. This research looks into the effect of such issue
by reading the financial statements, particularly the
Balance Sheet, Changes in Shareholder’s Equity and Cash
Flow statement.

Brief comments/views in respect to the following questions on strategy/methods to engage more effectively with local CFA Society members and broader investment community to create awareness of the ARX platform and to encourage contributions.

The paper is about a commentary regarding the ASEAN integration, its purpose and objectives, plans and benefits towards banking industry in the Philippine setting. Pros and cons have been discussed but it is limited to what is seen in the banking and finance markets of the said country.

The article is a commentary to the presentation made by Mr. Peter Wallace, founder of the Wallace Business Forum (WBF). In his presentation, Mr. Wallace explained why the next president will largely determine the country’s future growth trajectory, and how social media will play a critical role in deciding the outcome of the elections.

The main objective of the survey was to obtain opinions and views on: issues relating to corporate governance and financial disclosures among Chinese companies; the effectiveness of recent reforms made by China to improve corporate governance practices; and ways to further improve corporate governance practices in China.